The Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan, launched in 2003, is the European Union’s (EU) response to the global fight against illegal logging. In particular, FLEGT aims at reducing trade in illegal timber between the EU and timber producer partner countries.
FLEGT operates through two major instruments: bilateral trade agreements — known as voluntary partnership agreements (VPAs) — that are signed with willing producer countries, and the European Union Timber Regulation (EUTR), which came into force in March 2013. The EUTR mandates EU importers to exert due diligence in their sourcing of timber from abroad to exclude illegal supplies.
To date, six countries have signed VPAs. Among them, five have committed to apply VPA provisions regarding legality verification not only to timber imported to Europe, but also to timber traded on the domestic market in signatory producer countries. This means that timber harvested and traded on the domestic market will be regulated by national VPA licensing schemes (the so-called Timber Legality Assurance System, TLAS).
Ecuador has made significant efforts in recent years to improve governance conditions in the forest sector by redefining the role of State agencies, adjusting forestry regulations and improving the monitoring system for legal compliance. The Ecuadorian government decided not to pursue the negotiation of a VPA with the EU, thus most of these reforms are nationally-led initiatives.
Monitoring of legal timber extraction is complemented by payments for conservation and incentives for forest regeneration and timber plantations. Ecuador has made significant efforts to improve governance conditions in the domestic timber sector, specifically by simplifying the forestry regulations, allowing the use of simplified permits, and by implementing a robust and relatively sophisticated system for verification of forest legality, accompanied by controls at the different stages of the timber chain. Yet, there is scope for improvement in better integrating smallholders into the timber market.
Policy actions should focus on improving monitoring of ‘downstream’ activities in the value chain (e.g. depots, sawmills, industries); enhancing the monetary and non-monetary incentives for forest management and restoration in individual landholdings and community lands; improving information on timber prices and markets; and facilitating more transparent contracts between different actors.
Most timber harvesting in the Ecuadorian Amazon is done with chain saws on small-scale landholdings or indigenous community lands, and a portion of it is extracted without permits. Yet, most of the timber is legalized when it reaches the urban markets. Most timber is traded by intermediaries who have significant control of the markets. These actors have important access to capital, networks and technical know-how.
Smallholders selling timber can earn more money when they undertake the logging through approved management plans, as long as they participate in the sawing, harvest valuable species and engage directly in the selling of their timber with local intermediaries. Type of species and participation in the harvesting are far more crucial factors than legality in income generation, although legal wood often fetches better prices in the market.